On Monday, a New York jury found Novartis Pharmaceuticals Corporation liable for discriminating against female employees and awarded more than $3.3 million in compensatory damages. Yesterday, after further deliberations, the jury imposed an additional $250 million in punitive damages.

The damages will be apportioned among a class of as many as 5,600 women who alleged discrimination between 2002 and 2007. Individual awards will be capped at a total of $300,000.

In addition to pay discrimination, the plaintiffs alleged that male supervisors mistreated female employees, urged female sales reps to seduce doctors and discriminated against pregnant employees.

Plaintiffs’ counsel David Sanford had asked the jury of five women and four men to award punitive damages of between 2-3% of Novartis’ $9.5 billion in revenue for 2009, telling them that the company “tolerated a culture of sexism, a boys’ club atmosphere.” The jury obliged, awarding the plaintiffs close to 3%.

“The women of Novartis have had their day in court,” Sanford said. “We are absolutely delighted the jury has done the right thing.”

Novartis President Andy Wyss said the company was “disappointed in the jury’s verdict,” insisting that “for more than 10 years the company has developed and implemented policies setting high standards with regards to diversity and inclusion for the development of our employees.”

Novartis could end up paying even more, as well as being required to implement sweeping policy and process changes to deter future discrimination. The judge still has to decide whether to award as much as $37 million in backpay and/or whether to impose injunctive relief.

Various experts are already predicting that this case and the recent certification of the largest class action employment lawsuit in history are likely to spur even more big-ticket employment lawsuits.

Stay tuned.

First, there was the certification of the largest class-action employment lawsuit in U.S. history. Then, a college agreed to pay $1 million to settle a sex harassment lawsuit. Then another employer agreed to pay $263,360 to settle age discrimination claims. Even a union got into the act, settling a retaliation suit for relatively big dollars.

Here are some of the details . . .

Wal-Mart Makes History

On Monday, a federal court in San Francisco certified the largest class-action employment lawsuit in U.S. history. That means that a case that could involve several hundred thousand plaintiffs demanding billions of dollars in damages may now proceed to trial.

The suit was first filed in 2001 by a greeter named Betty Dukes who worked in Wal-Mart’s Pittsburg, California store. Dukes and others claim that female employees are paid less and given fewer opportunities than their male counterparts. They also contend that women make up more than 70% of Wal-Mart’s hourly workforce but less than a third of store management, saying that the company’s “strong, centralized structure fosters or facilitates gender stereotyping and discrimination.” The plaintiffs seek back pay and punitive damages.

Wal-Mart has objected to the size of the suit, calling it “historic” in scope and arguing that it would be too difficult to litigate. Judge Susan Graber of the appeals court disagreed, ruling that although “the size of this class action is large, mere size does not render a case unmanageable.”

Wal-Mart has indicated that it may appeal the court’s sharply divided 6-5 decision to the Supreme Court, saying “We do not believe the claims alleged by the six individuals who brought this suit are representative of the experiences of our female associates.”

College Pays $1 Million

Lafayette College in Easton, Pennsylvania agreed to pay $1 million and furnish significant remedial relief to settle a sex harassment lawsuit filed by the EEOC.

The EEOC alleged that Lafayette’s supervisor of loss prevention engaged in repeated harassment of five female public safety employees, including groping, forcible kissing, lewd comments, explicit gestures and pornographic e-mails. One employee was forced to quit due to the harassment, according to the EEOC.

“No one should have to endure the abuse these women faced at work,” said EEOC Chair Jacqueline Berrien. “This significant settlement shows that the EEOC will insist on meaningful relief for workers who are victims of harassment.”

Each of the five plaintiffs will receive $200,000 under the terms of the settlement.

Fire Department Pays $263,360

The Selden Fire District in Long Island, New York agreed to pay a total of $263,360 to 23 firefighters to settle a class-action age discrimination suit brought by the EEOC.

The EEOC alleged that the district refused to let volunteer firefighters over age 55 accrue credit toward a length-of-service award due to their age. As a result, the EEOC contended, older firefighters lost pension amounts after they turned 55 in violation of the Age Discrimination in Employment Act.

“Older workers, like these firefighters, should not be deprived of valuable pension benefits simply because of their age,” EEOC Chair Berrien said. “This settlement ensures that these highly valued public servants will finally receive fair compensation.”

Union Settles Retaliation Suit

The Maryland Classified Employees Association (MCEA) agreed to pay $80,000 to settle an EEOC retaliation suit. The EEOC charged that MCEA (1) fired an employee for her “perceived involvement” in a prior EEOC investigation of MCEA’s alleged unlawful employment practices and (2) unlawfully denied a promotion to another employee who filed a discrimination charge against the union. The MCEA also agreed to various anti-retaliation remedial efforts in a two-year consent decree.

“Title VII depends for its enforcement upon the cooperation of employees who are willing to oppose or report employment discrimination,” said EEOC Acting Regional Attorney Debra Lawrence.

Stay tuned.

A new study by the law firm of Seyfarth Shaw confirms what we’ve been seeing in the headlines in recent months:  when the economy goes down, lawsuits go up.

The firm’s Fifth Annual Workplace Class Action Litigation Report identifies several major trends in the world of employment lawsuits:

1.  Class Actions Up.  The financial meltdown is resulting in increased class action litigation, including ERISA class actions seeking recovery for 401(k) losses and post-RIF discrimination and WARN Act cases.  In fact, employment-related class actions are the #1 exposure driving corporate legal budget expenditures.

2.  Wage & Hour Up.  The volume of wage and hour suits continues to “increase exponentially.”  The number of Fair Labor Standards Act (FLSA) class actions outnumbered all other employment-related private suits.  The biggest wage and hour explosion is at the state level, particularly in California, Florida, Illinois, Massachusetts, New Jersey, New York, Pennsylvania and Texas.

3.  $$$ Up.  Settlements/damages paid out on workplace class actions continues to rise, especially in ERISA cases.  The top ten settlements alone in 2008 totaled more than $18 billion.

What will 2009 bring?  Probably more of the same, unfortunately.  Each of the above trends is expected to continue to grow in 2009.  “The findings in this year’s report illustrate that the trend we’ve analyzed for the past few years continues unabated:  there is an explosion in class action and collective litigation involving workplace issues,” said J. Stephen Poor, Seyfarth’s Managing Partner.

The lesson?  Take proactive action NOW.  Identifying and addressing class action vulnerabilities should be at the top of every employer’s list of 2009 priorities. 

In other words, imagine what the world’s toughest plaintiffs’ firm would sue you for and fix it before they get a chance.

There are two things most HR professionals strive to avoid:  (1) class actions and (2) jail.  An HR professional at an Iowa meat-packing plant managed to find her way into both.

Agriprocessors Inc. was hit with nearly $10 million in fines for violating various wage and hour laws.  Among the alleged violations:

• $9,643,600 for 96,436 unlawful clothing deductions affecting 2,001 employees (reducing their wages by $192,597)
• $339,700 for 3,397 unlawful “sales tax/miscellaneous” deductions affecting 1,073 employees (reducing their wages by $72,190)
• $4,900 for failing to pay 42 employees their final paychecks

In other words, by attempting to unlawfully save about $270,000, the company now must pay more than 37 times that amount.

In a separate matter, Laura Althouse, one of the company’s HR professionals, pled guilty to charges of conspiring to harbor undocumented aliens and aggravated identity theft in connection with a May 2007 raid that uncovered nearly 400 undocumented workers.  Althouse faces up to 12 years in prison and up to $500,000 in fines.  Similar charges are pending against another Agricprocessor HR professional.

The Lessons

They’re pretty obvious here.  Know and follow the law, especially the nuances of wage and hour and immigration law.  Failure to do so could be hazardous to your career and — possibly — your freedom.

To avoid this happening to you, check out the handy materials under the “Tools & Tips” Section of the Blawg.

A federal judge has ordered Manhattan’s Saigon Grill to pay more than $4 million to three dozen $2-an-hour delivery workers.

The case is truly one of the most egregious I’ve ever seen.  Here are some of the findings from Judge Michael Dolinger’s 79-page decision.

• The delivery workers were paid only $520 a month despite the fact that many of them worked more than 260 hours apiece.
• The employer unlawfully deducted pay (sometimes as much as $200) for infractions such as letting the door slam on the way out of the restaurant and failing to log in deliveries.
• The employer failed to reimburse the employees for buying and maintaining bicycles used for the deliveries.
• Records kept by the employer were woefully incomplete and wrongfully destroyed.  The records that were kept contradicted sworn testimony from the owners that the employees worked less than they claimed.
• The employer retaliated against several employees by firing them after they notified the company of their intent to file a complaint.

In short, the judge found that owners Simon and Michelle Nget “showed no regard whatsoever for legal requirements in connection with their wage policies.”

Some of the delivery workers will receive as much as $328,000 as a result of the judgment.  “I’m very, very happy about this decision,” said Yu Guan Ke, one of the plaintiffs.  He said he plans to use the funds to buy health insurance for his family.

More money could be coming the plaintiffs’ way.  A hearing in December will determine whether the Ngets must pay the plaintiffs’ attorneys fees and costs.  In addition, the judge has yet to rule on the retaliation claims, for which the plaintiffs are seeking more than $1.5 million plus punitive damages.

Stay tuned.  Click here to read more on this case from the New York Times.

Fulbright & Jaworski’s always-fascinating annual Litigation Trends Survey was released this week.  Here are some of the key findings:

• Employment law disputes remain the #1 legal headache for U.S. businesses.
• 1 in 4 companies has at least one lawsuit with more than $20 million at stake.
• 1 in 10 companies spends more than $10 million on litigation each year.
• Arbitration ain’t cheap either:  1 in 4 companies spends more than $100,000 per dispute.
• 1 in 4 companies is facing a class action (a dramatic drop from 6 in 10 last year).
• Race, gender and wage & hour claims are the most costly.
• The education, financial services and engineering/constsruction sectors are facing the biggest increases in employment claims.
• The #1 area of dissatisfaction with outside attorneys is cost management.

Click here to download the full report.

Wage and hour claims continue to dominate the headlines . . .

Fastenal Pays $10 Million

Fastenal Co., a construction supply distributor, agreed to settle overtime claims for $10 million.  Employees in California, Oregon and Pennsylvania alleged that the company improperly classified assistant managers as exempt, failed to pay overtime and violated meal period laws.  The company denied any wrongdoing and said it entered into the settlement to avoid legal fees and the uncertainty/distraction of a trial.

Interwall Pays $1.7 Million

The California Attorney General reached a settlement with Interwall, a Southern California drywall company, for alleged overtime, meal-period and record-keeping violations.  The company agreed to pay $1.4 million in damages, $200,000 in fines, $131,000 in back payroll taxes and nearly $100,000 in attorneys’ fees and other costs. 

Among other things, the company allegedly shifted employees among various corporate entities to avoid overtime as part of an effort to cut costs and underbid competitors.  The company denied any wrongdoing.

The Lessons

Once again, one of the best ways to avoid big-ticket liability is to ensure that your company fully complies with all wage and hour laws.  This is especially critical with exempt/non-exempt classifications, meal/rest period laws and record-keeping requirements.  Courts (and plaintiffs’ attorneys) continue to be very hard on employers where there’s even a hint of impropriety.

As a starting point, check out our Fair Labor Standards Act (FLSA) Cheat Sheet here or under the “Tools & Tips” section of the Blawg.

Yesterday, United Health Group agreed to pay $895 million and to implement sweeping corporate governance changes as part of a tentative settlement of a stock option backdating lawsuit.

United Health agreed to:  (1) take the company’s performance into account when setting executive compensation; (2) create a shareholder-elected position on its board of directors; (3) implement stringent director-independence policies; (4) mandate an options holding period for all executives; and (5) require shareholder approval prior to any option repricing.

Excluded from the settlement are the company’s former CEO, William McGuire and former top lawyer, William Lubben.  In 2007, McGuire agreed to pay the Securities and Exchange Commission $468 million related to the backdating allegations.  Several lawsuits remain pending against the two former executives.

The Lesson

Stock option lawsuits have rocked the business and HR world for the past several years.  As discussed previously here on the Blawg, some HR execs have even gone to jail when they failed to blow the whistle on backdating schemes.

HR leaders have a tremendous opportunity to influence others to do right — or to do wrong.  One of our Top Ten Greatest Hits of Employment Law Advice is “The Mom Test.”  When making decisions, ask yourself:  “What would my mom think if she read about this on the front page of the paper?”  If it would disappoint mom, don’t do it.

The lesson is simple:  failing to do the right thing as an HR leader can land you and your company in legal hot water.  It could cost you your job, your money and your reputation.  Don’t let that happen to you.  Know the law, follow it and help others to do the same.

Yesterday, a Minnesota judge awarded a class of more than 56,000 Wal-Mart employees $6.5 million in back pay for meal and rest period violations.  An October 20 penalties hearing could result in an additional $2 billion in damages.

The Facts

The employees alleged that Wal-Mart required them to work off the clock for training and didn’t allow full meal and rest periods in line with state law.  Wal-Mart denied the charges and argued that it fully complied with state law.

One of the centerpieces of the case was a series of internal audits conducted by Wal-Mart itself.  The audits showed that employees were missing breaks and one audit rated every Minnesota store “unsatisfactory” in the handling of rest periods.  Wal-Mart tried to argue that the audits were flawed.  The court rejected that argument, finding that it was Wal-Mart’s responsibility to correct or stop the audits if they weren’t accurate.

The court also pointed to the fact that Wal-Mart stopped using an electronic punch in/out system.  Once it did so, it no longer had a means to track break periods accurately.

The Lessons

The primary lesson is pretty simple:  pay employees for time spent working.  Break periods aren’t break periods if employees aren’t truly relieved of their duties.  With respect to meal periods, the Department of Labor states:  “The employee is not relieved if he is required to perform any duties, whether active or inactive, while eating.”  The solution is simple as well:  create a clear break policy and enforce it fairly and consistently.

Also, be careful when you conduct internal audits.  They can be a great way to monitor and improve compliance.  However, if you ignore the results and fail to make appropriate changes, you run the risk of creating Exhibit A for your next lawsuit.

(Special thanks to the Ohio Employer’s Law Blog)

The Kroger Co. has agreed to settle a class action race discrimination lawsuit for $16 million.

The lawsuit alleged that Kroger discriminated against African-American employees in Alabama, Georgia, Kentucky, Ohio, Tennessee and Texas in promotions and pay.  The plaintiffs also alleged that they were subjected to racial harassment.

In addition to the $16 million, a proposed consent decree would require Kroger to:

• establish minimum qualifications for all management positions 
• create a pay rate monitoring system that would allow store manager decisions to be overturned if unfair
• provide an annual report, including salary and promotion data, to the plaintiffs’ law firm

Kroger sent a letter to its employees that said:  “The plaintiffs who initiated this lawsuit seven years ago obviously felt strongly that the company was not treating them fairly or respectfully.  No one in our company should feel this way.”  The company added:  “We have taken steps over the past several years to build an inclusive culture that demonstrates our commitment to all associates.”  Among other things, the company said it has hired a chief diversity officer and created cultural councils to help promote inclusiveness.